STAKEHOLDER MANAGEMENT FROM ISLAMIC PERSPECTIVES Prof. Dr. Azhar Kazmi Department of Business Administration International Islamic University Malaysia

Lectures in strategic mgmt / Stakeholder mgmt from Islamic perspectives / Azhar Kazmi / Stakeholders Organizations have stakeholders who hold interest directly or indirectly. There are internal stakeholders such as the managers and employees There are external stakeholders such as the customers, community, and government

Lectures in strategic mgmt / Stakeholder mgmt from Islamic perspectives / Azhar Kazmi / Stakeholders’ perspective to strategic management Strategic management based on an analysis of the economic power, political influence, rights and demands of various stakeholders leads to strategy formulation. The source of competitive advantage is based on superior linkages with stakeholders leading to trust, goodwill, reduced uncertainty, improved business dealings and ultimately higher firm performance Overall, the organization that is able to manage its stakeholder relationship is likely to gain greater success

Lectures in strategic mgmt / Stakeholder mgmt from Islamic perspectives / Azhar Kazmi / Corporate governance Companies are funded by shareholders, managed by the top management, and overseen by the board of directors. The relationship of these three groups is called corporate governance.

Lectures in strategic mgmt / Stakeholder mgmt from Islamic perspectives / Azhar Kazmi / Problems in corporate governance Various problems have been experienced in the governance of corporations. The shareholders are often visualized as a group interested only in its narrow self-interest of earning money. The top management is often accused of unethical practices or mixing up corporate interest with personal interest. The board of directors is thought of as a group uninterested or ineffectual, or both, in overseeing the affairs of the corporation.

Lectures in strategic mgmt / Stakeholder mgmt from Islamic perspectives / Azhar Kazmi / Root cause is unfair and biased dealings with stakeholders Stakeholders management is difficult when there is unfair and biased dealings with the stakeholders Organizations do not necessarily have to deprive one stakeholder in order to benefit another stakeholder Stakeholder relationship need to be based on mutual trust and understanding

Lectures in strategic mgmt / Stakeholder mgmt from Islamic perspectives / Azhar Kazmi / Islamic teachings are clear Islamic revealed knowledge sources are clear on the nature of human behavior. The Holy Quran provides extensive references to what is the right and wrong behavior. Right behavior is the key to just stakeholder management